Tuesday, November 24, 2015

The State of Public Discussion and Understanding of Economic Matters is Still Primitive

By Don Boudreaux

Quotation of the Day…… is from page vii of the 1983 translation, by Leland Yeager, of Ludwig von Mises‘s 1919 book, Nation, State, and Economy; it’s the final line of Mises’s Preface:

My task can only be to direct the reader’s attention to points that public discussion does not usually take sufficiently into account.

This task is one that too few economists perform, and one that even fewer economists perform well.

Regrettable, that.

The state of public discussion and understanding of economic matters is still primitive. If the state of public discussion and understanding of medicine were today equivalent to that of economics, the most-popular cures for bodily illnesses and injuries would be magic potions and superstitious rituals, and the medical “experts” would be witch doctors and faith healers. Proponents of germ theory would be scorned as dangerous and ill-intentioned because they advise people that that which is unseen is both real and relevant.

Sadly, politicians and pundits – some of whom actually have university degrees in economics – still today ignore the unseen. What’s real and relevant, according to them, is only that which is obvious and visible to the man-on-the-street. ‘Imports and immigrants destroy jobs and lower wages in the domestic economy!’ ‘Government debt owed to fellow citizens is no burden to domestic citizens!’ ‘Raising the minimum wage raises incomes for all low-skilled workers!’ ‘Rent-control and other price-ceilings lower the costs to consumers, and increase the availability, of apartments and of the other goods and services whose prices are capped!’ ‘Buying local is good for the local economy – and better for the environment!’ ‘Market-led economic growth makes our lives dirtier and more hazardous!’ ‘The greater the human population, the lower are incomes per person – so population control is key to promoting economic prosperity!’ ‘Government officials, because they are called public servants, serve the public, while people who work in the private sector serve only a handful of private interests!’ ‘Finance produces nothing (and is therefore economically wasteful or even destructive)!’ ‘Poor people would be richer if rich people were poorer!’ ‘Women on average are paid less than men on average because of sex discrimination!’ ‘Trade deficits mean inadequate demand in the domestic market!’ ‘Firms that are much bigger than the average firm have monopoly power!’ ‘Military conscription lowers the economic cost to the nation of staffing a military!’ ‘The more petroleum we use, the less petroleum we have available!’

The list of deeply mistaken yet widespread beliefs – of which the above is just a sample – is long.